Lagarde tells bloomberg of the ins is talking to china about the risks exposed by excessive debt. The superjumbo deal that the emirates is said to be negotiating. We are live at the dubai air show with the latest. It is 8 00 a. M. Here in dubai. I am yousef. This is Bloomberg Markets middle east. I hear there are some ancient tribal rivalries heating up in the middle east. Im not talking about any of this. I am talking about them versus boeing. You are live on the scene. The dubai air show is finally here. The last dubai airshow was 179 billion and recordbreaking deals. That is a high bar to live up to. In the time since a lot has shifted. The Competitive Landscape has shifted. We are talking about the visa bans. Numbers tell a story, middle east operations are growing at the slowest pace in eight years, the monthly growth. Lets look politically. The tensions are a lot higher with the standup up with qatar that has halted some key air routes. The economics have shifted as well. Have dropped, government have had to rationalize their spending. They will be a lot less appetite this time around for big deals. There is a close one that we are very closely watching and that additional for 36 8380. Tracy this is potentially tim clarks parting gift. Before we talk about more things aviation lets get a check of how the markets ended the week on friday. Anwe mentioned, we learned important fact, stocks can go down as well as up. Im being somewhat facetious. It was the first time we have seen u. S. Stocks post a weekly loss in about two months. That was said to be up because the republican tax reform wasnt coming along as quickly as some may have hoped. Bank stocks are getting squeezed by tax reform but also that yield curve in the u. S. Which continues to flatten. The downside in u. S. Equity all culminated in a little bit of index,ity we saw the vix the wall street gauge resurgence. It was going up higher than 11, i am tented him it a spinal tap joke but i want. Finally, take a look at the highyield bond. This is the junkbond. That had quite an interesting week at one point it felt very sharply. This is one of the things that helped the market on thursday and friday but it ended the week slightly up. Maybe some of the credit concerns for now are falling into the background. Lets check in on the headlines from around the world. Donald trump says he believes Vladimir Putins repeated denial of meddling in the u. S. President ial election came after the american president met him on the side of the apec summit in vietnam. Trump called the accusations about russia and artificial democratic hit job. Christine says they are talking to china about the risk posed to much credit. Speaking exquisitely to aremberg, they say chinese listening and taking action. We agree with china, the e of the very best our partners in china. Particular, the Treasury Department in china are listening. They are voting that growth that is filled predominantly by expensive credit. 40 members of parliament have agreed to sign a letter of confidence in theresa may. That is according to the sunday times. Short ofr is just a the amount required to force leadership challenges and they have been under increasing pressure since losing the parliament drink majority in a snap election earlier this year. Days shopping bonanza generated a record 20 53 25. 3 billion in sales. The brands nike were some of the big winners. They say alibaba wants to make the event more global in the future. Global news 20 for hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Lets get back to one of our top stories. The bahraini foreign minister says iran was responsible for sabotaging an oily between saudi arabia. That willccusation inflame existing tensions. The rhetoric has been very sharp, lets get more contacts on the story. These edits are for the middle east. We are also being joined by john paul. He will be with us the lower. That me start with you. Another escalation with the potential for setting up another series of dominoes in what has been a real buildup between iran and saudi arabia. A real showdown ahead . It has been a real buildup. It has been another piece that is coming in with this. We had a resignation of the lebanese Prime Minister. We have the rockets coming from yemen. Andmore recently from iran the leader. We get the sense that there is a wrapping up of tensions and rhetoric that could lead to something that nobody is quite clear exactly what it is leading to. There is this nervousness about this, all the questioning of what exactly is going on. Lets get you into the conversation as well, lets get a look at what the next level of escalation would be. We have not seen direct confrontation between iran and saudi arabia. Andd we see more conflicts intensification of those conflicts . Seen a direct confrontation and i still think the chances are unlikely in the nearterm. Therens have escalated, is confrontation around the region, there is confrontation going on in yemen, confrontation in iraq and syria. Possibly in lebanon as well. I think the broader story is is on theical risk rise across the gcc and across the middle east and while investors in the middle east are used to some level of political risk, they are not used to that risk emanating from the gcc. I want to pick up on that point. When we see political risk, the investors backed away from those markets. In the case of saudi arabia, this anticorruption crackdown is indicationed as an that reform is coming and it will make it easier for reform to happen. That is the positive story that has been spun for some investors. Part ownership of saudi stocks has been trending down. On a net net basis, is this good or bad for foreign interest in the market . On the longterm, a positive. If everything goes in the right direction from here on out. Clamping down on corruption is a positive for any market. But it is not just about arresting people, it is the will of law, due process. We know to hundred individuals have been arrested, we dont know the names of those individuals the crimes, what they have been alleged to have committed. If you look at the industries, government, aviation, media, construction, this is wideranging. It is not just an isolated case, it highlights a structural institution. I want to bring you back on this notion of Foreign Investors potentially leaving saudi. What are we expecting interns of outflows of the market . Do we expect to see any reaction from the saudi authorities . Maybe even cap control if necessary . There is a lot of nervousness among the saudi wealthy right now. They are nervous about being seen to try to get money out of saudi arabia. They may be tempted to but they are probably saying i dont want to come into the crosshairs of this. But what we are hearing is that a lot of them are looking at their investments and their more liquid assets that they have overseas in the gulf in particular and trying to shift that out of the gulf countries fearing that they will be requested from the central bank and the saudis to the uae and the other gulf countries to free some of those assets as well. You see a lot of request and calls to Fund Managers saying help me out, how can i get the money out . What is the next step in terms of Saudi Foreign policy and the situation as it stands in lebanon . We dont understand where the ,ebanese Prime Minister is isnt that true . He is in riyadh and meeting i believe he met the russian ambassador. He has also traveled to the uae, meeting the conference at the uae. He seems to be out and about in a sense within the context of saudi arabia and allies but he is not returning to lebanon. That is kind of a big question and lebanon is resigned and saudi arabia they are asking why they are not coming back. They are being to accusations from some of the lebanese parties that he is being held against his will. Is theue is that it uncertainty which is what investors usually hate. The uncertainty is that nobody really understands what the next step is or what is going to happen. Or what the demands are. Saudi arabia is basically trying to draw a line in the sand against iranian influence but what are the steps that it is going to take to achieve that concretely . You, but gave a preview of what is going to come up on bloomberg magus middle east. We will continue with our aviation seen as we speak with the ceo of Dubai Airports and the region, this is the largest air show in this part of the world but can they even get remotely close to the big deal that were signed last time around, this is bloomberg. Welcome back to Bloomberg Markets middle east. Negotiating a deal for 30 additional airbus is. Executives are working to seal a deal with the goal of making a formal announcement at the dubai airshow later today in order for that number of planes, it would be valued at almost 16 million at current list prices and would help extend the embattled programs life. You can of course watch our interview with tim clark tomorrow right here on bloomberg tv. Meanwhile, boeing see saudi arabia as a promising market for a potential new family of aircraft targeting mid range lights. The companies hasnt or the middle eastern country says busy domestic groups be a good fit for a midsize plane. Boeing has discussed it embryonic middle of the market jetliner with saudi arabia and airlines as well as this version of the single 737. The u. S. Justice department has suggested to at t officials that they need to figure out to get the benefits they are seeking from the proposed merger with time warner without being able to on cnn, tbs and other turner channels. That is according to people familiar with the discussions, antitrust officials have suggested that at t is for alternatives such as selling turner and forming a joint venture with the newly separated companies. That is your Bloomberg Business flash. After heading historic highs on the back of solid earnings, Global Equities sold off sharply amid doubts about many things meaningful reform of the u. S. Tax system. They posted their first weekly loss in more than two months as the senate revealed is proposal would delay cuts to the corporate rate until 2019. There will be monday of markets this coming week, in particular brings coronaank and have them speak at a policy panel on tuesday. Lets bring back our guest john paul bhagat. He is the founder and chief economist at lighthouse rick white house research. But start with u. S. Tax reform, how much of the markets optimism do you think is predicated on getting some sort of tax reform . We have been hearing that line of argument since november of last year and not a lot has happened. I think the market rally shows that the market is confident that Central Banks in the u. S. And around the world are not in a hurry to raise Interest Rates anytime soon. Key factor that has been underpinning the Global Market rally that we have seen over the past year. It has also been the fact that that has underpinned the rising u. S. Consumer confidence. I would not be overly surprised they will be shocked if tax reform in the u. S. Gets delayed. You brought in my chart because it is so good that you could not wait. It shows marketbased expectations of inflation and shunned by the fiveyear tips versus wti oil and the point i was trying to make was that we have not seen Inflation Expectations or Higher Oil Prices go to Inflation Expectations. Yield curved has been really flat. The yield has undershot expectations for several years so i dont see it having heading drastically higher anytime soon. This seems to be driven by this region and an uptick in geopolitical risks and anytime that you hear in the media in the front page of headlines and newspapers that tensions between saudi arabia and iran have picked up you see a kneejerk reaction in oil prices and the impact on this region will be quite interesting because normally an uptick in oil prices is quite positive and filters through to the higher Consumer Confidence but at this point it might also be counterbalanced by l what we are seeing in saudi arabia which is probably the biggest concern for this region from a market perspective over the next couple of months. You say that investors are not going to be shocked by the lack of any tangible progress when it comes to tax reform but the reality is that the rally we have seen across a lot of these asets has been factoring in big change on the physical side of the United States. Does that mean we will see more of a selloff off the back of that . I would not be the one to call this the start of the selloff in u. S. Equities. I think the rally probably has a lot longer to run. What i am saying is that i think it is quite difficult to put the rally and markets that we have seen over the past year down to Investor Expectations that congress would actually pass some overhaul is of the tax system. U. S. Politicians have a history of disappointing so the fact that this will be delayed into 28 2019, i dont see that as a major catalyst for the sort of a downtrend. I think what we saw was volatility and markets taking a breather. Hold that thought, we have pointed to get through. Program weme on the will take a closer look at what the impact of some of the new taxes that have been gradually been introduced into the market, what impact they are having on some of the biggest travel reach a operators, we will be live at a dubai airshow. That is next, dont go away. This is bloomberg. Offhe dubai airshow kicks and the expectations are a little bit contained compared to the 179 billion that were signed at the last airshow. Lets see what we figure out of the liberation over the next few days. Ill be here is common laughlin. Coal Mclaughlin Cole mclaughlin. What are you looking forward to at this airshow . i love that so many visitors come to dubai. It reflects favorably on the future by visitors coming here in order to buy. It stood out compared to its peers because at the beginning of the show we were talking how the economics have shifted, the politics have been a lot different, would you say that everything is, relatively good . Dubai is doing really well. Year our business thising very good, converted into 19 million terms. We are very happy with the performance of dubai this year. What kind of growth are you targeting . Three or five years with the development that we are to billion 2 billion. We can have 3 billion saved over the next five years. We spent to have close to 10,000 people employed. In terms of the key Source Markets for a lot of your growth, which country has been fundamental to that story and will continue to be Going Forward . The asian civic is very good. Chinese traffic is doing terrifically. Traffic through dubai airport, the chinese basin. They cap a percent of our business. That is continuing to grow. We honor the china union. With ctripagreement in china. That is one of the Largest Companies in the world. They are sending toys to dubai. They are visiting dubai. Awayw do you diversified from your concentration to the divide growth story . In Turbulent Times it would be good to have some of that a little bit, managing services at other airports around the world. We have been asked on a number of occasions to go to other airports because we have been growing here consistently for the past 30 years and we do do other things. We on the dubai stadium for example. We want a very successful tennis tournament there. We just finished year 2035 of that. We now own a hotel of our own. Recently we opened a new irish village and a new service shop at the resort which was opened last year and that is beginning to grow very well and we are very happy with it. What would you say is to be the catalyst or a catalyst for you to really accelerate toward your growth target . Is it the rebound we are seeing in oil prices . Can you pinpoint one factor that is critical . Growth in the chinese economy is very important to us. Some traffic at the moment is four or 5 . Many on theting visitors to dubai. Dubai is in the top 10 most visited cities in the world. Yearmillion visitors last and were looking for in excess of 20 million. Will have the biggest travel reach operators. Thank you very much. I was wondering how long we can make it in the show until someone made the Turbulent Times pun. It was about 25 minutes. Trumpt we will be talking heading to the philippines after the weekend. We are live to manila next. This is bloomberg. We are in dubai. It is 90 minutes before trading kicks off. There is a ton going on in the region. Including the dubai air show. That is where yousef is. We are watching the local markets for continued fallout from saudis corruption crackdown. Before we move onto that lets check in on the first word headlines from around the world. Bahrains foreign minister says iran was responsible for sabotaging and oil link between the island state and saudi arabia yesterday. It is in a key session that will likely only increase powers and it comes after we have accused iran of thing involved in a foreign Missile Launch by many rebels last weekend. The recent drama has spurred hedge fund bets. Believes by says he mccubbins repeated denials of meddling in the 2016 u. S. President ial election that came after the american president briefly met putin on the sidelines of the apec summit in vietnam. Trump called the accusations about russia and artificial democratic it job. War of words between President Trump and north Koreas Kim Jongun goes on with the president tweeting on sunday why would kim jongun insult me by calling me old when i would never call him short and fat . In recent days, north korean staterun media has taken to referring to trumps age and it has been 60 days since the Missile Launch from the north and south koreas foreign minister told bloomberg that the current strategy is working. Sanctions are working. That may be causing them to recalculate, it could also mean that they are finetuning some technical aspect of what of further provocation